LOWER MACUNGIE TWP., Pa. - As Lower Macungie residents are getting their first township property tax bills in 12 years this week, township commissioners are taking steps toward reducing tax bills for homeowners in 2015.
The commissioners plan to develop a homestead property tax exemption program for the township.
The amount of township property tax that homeowners must pay is based on the value of their homes. A homestead exemption would exclude a portion of that value from being taxed.
Such homestead property exclusion programs are feasible only in townships with enough commercial and/or industrial properties to compensate for the reduction in residential property taxes, explained Atty. Richard Somach, the township's solicitor, in a memo prepared for commissioners.
Businesses and industries in the township would not be eligible for the tax break.
"It's a mechanism for us to pass on savings to residents of the township," said Commissioner Ryan Conrad.
Such homestead property tax exemptions are allowed under state law.
The amount of a home's value excluded from taxation is determined by a fixed dollar amount rather than a percentage.
But the amount of that exclusion cannot exceed one half of the median assessed value of owner-occupied homes in the township.
The median value of homes in Lower Macungie is $227,618.75.
"You could theoretically exempt up to one half of that, which would be about $114,000," said Somach. "But that would be really high. Most places do $30,000 to $50,000."
The solicitor explained the program this way: If you own a home in Lower Macungie that is worth $200,000, this year you are paying $66 in township property taxes. If the township would exempt $100,000 of your home's value, you would save $33.
The owner of a median-priced home in Lower Macungie is paying a $75 township property tax bill this year, said township manager Bruce Fosselman.
Somach said if Lower Macungie would exclude $100,000 of a home's value from taxation, someone living in a home worth $100,00 would pay no township property tax..
During the first year of the program, the township could not raise property taxes to make up for tax revenue lost by implementing a homestead exemption, explained Somach..
He said one way around that would be to approve a tax increase before adopting a homestead exclusion program.
The solicitor also suggested that keeping the township property tax unchanged but implementing a homestead exemption would produce the same result as lowering the tax for all property owners next year.
"Someone has to crunch the numbers," Somach told commissioners Thursday night.
"We're early enough in the year that you can do all that stuff. The goal is to get this in place for 2015 if you want to do it."
He asked them: "Conceptually, is this something that even appeals to you?"
"It's definitely worth continuing to explore," said Conrad, president of the five commissioners. "This is a good opportunity for us."
Conrad said the township will have to determine the dollar amount it intends to exclude from its 2015 property tax for homeowners.
"We'll start putting some numbers together," said Fosselman.
The township manager called creating a township homestead program "a key goal" to be done before 2015.
Conrad chairs the commissioners' budget & finance committee, where the homestead proposal was discussed early Thursday night. Four of the five commissioners were present. Commissioner James Lancsek was absent.
At the regular commissioners meeting following that committee meeting, Conrad announced there was consensus among the four commissioners "that we should continue to pursue this."
After the meeting, Somach said he is confident all five commissioners will support implementing the homestead exclusion program.
Conrad said other first-class townships have had successful homestead programs for years.
Because Lower Macungie's property tax -- the first since 2012 -- is low, Conrad and Somach agreed the amount of actual savings will not be very much. But Conrad said it shows commissioners are doing what they can to try to reduce people's tax burden.
Somach recommended commissioners adopt an ordinance if they want to implement a Lower Macungie homestead property exclusion program, then renew it on an annual basis by resolution.
Township officials said a homestead law also would allow Lower Macungie to reduce the amount of the exclusion in any given year, as an alternative to raising the property tax if more tax revenue would be needed.
Somach credited Commissioner Ron Beitler, who began his term in January, with bringing the homestead exclusion idea to the attention of township officials.
After the meeting, Beitler said he hopes all five commissioners will support an exclusion program, adding: "I think it's a no-brainer."
Beitler noted Pennsylvania does not allow municipalities to tax commercial properties one way and residential properties another way.
"This ends up being a way around that," said Beitler, later adding: "That's the beauty of it."
Beitler argued that commercial and industrial property owners should pay their fair share. As an example, he cited wear-and-tear caused to township roads by tractor-trailers servicing warehouses. He claimed one fully-loaded tractor trailer has the same impact on a township road as 300 cars.
Homeowners would have to apply to get a homestead exemption.
Somach said East Penn School District already has such a homestead program and that more than 80 percent of Lower Macungie homeowners already have qualified to get a homestead exemption with the school district.
Paying property tax with a credit card
In another property tax issue, commissioners unanimously approved allowing Lower Macungie property owners to use credit cards, debit cards or e-checks to pay their township property tax to tax collector Patricia Vassilaros.
But those who do so also must pay the tax collector any additional surcharges for the use of those credit cards, debit cards or e-checks.
"If you want the convenience of using a debit card or credit card, you'll pay for the convenience," said Somach.
Somach said those surcharges were his only concern about people paying by credit card. "If the tax is $100 and there's a four percent fee, we would only get $96. If everybody paid with their credit cards, at the end of the year we'd be four percent short on our budget."
Somach said that surcharge is 2.39 percent on credit cards such as VISA or Master Card, $2.95 per debit card transaction and 75 cents for e-checks.
False alarm ordinance working
On a different issue, Somach reported the township's latest enforcement of its new false alarm ordinance earned it a $150 fine from a resident and $300 from a business this week.
The ordinance is designed to reduce the risks inherent in the township's firefighters responding to too many false alarms.
And it is working, reported township code enforcement office Ben Galiardo. He said the number of false alarms has declined since the new false alarm ordinance was established last July.
Galiardo said about $7,000 in fines has been collected since July, adding all that money goes to the Lower Macungie Fire Department.
He reported about 75 percent of false alarms emanate from businesses and the other 25 percent from residences.
He said 99 percent of the people don't contest the fines.
Galiardo said most false alarms are caused by burnt food. He said others decide to clean smoke detectors without notifying their alarm company, which sets them off.
East Texas Task Force
Also Thursday, commissioners agreed to create a tax force to study how to "strengthen" the village of East Texas in the township, including via possible zoning changes.
Township planning director Sara Pandl said that task force will have seven to nine members, including a commissioner from the planning & zoning committee; a member of the township planning commission; a representative of Smooth-On, the manufacturing company that just purchased the former Day-Timer building, and other East Texas business owners and residents.
Pandl said the task force will meet frequently - more than once a month - for about six months.
Township commissioners will approve task force members.
Also during the meeting:
* Commissioners approved a new policy that will allow them to attend and participate in meetings via telephone or other electronic communication system up to three times a year.
In addition to township commissioner meetings, the policy applies to meetings of all Lower Macungie boards, committees, commissions and councils.
The only exception is the zoning hearing board, whose members must be physically present at meetings.
* Commissioners honored Boy Scout Adam J. Banko of Troop 439 for achieving the rank of Eagle Scout with a proclamation. His Eagle project involved planning and constructing a trail with a lookout area in the township's Camp Olympic Park.
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